MUSCAT: Oman plans to meet its financing needs for 2025 through a combination of local borrowing worth RO750 million, external borrowing of RO1.304 billionn totaling RO2.054 billion , and a withdrawal of RO400 million from reserves. (one RO is $2.6)
The Sultanate’s total financing requirements for the year are projected at RO2.454 billion, which include a budget deficit of RO620 million and debt servicing obligations amounting to RO1.834 billion, according to the Ministry of Finance’s 2025 budget guidance.
Notably, Oman’s fiscal health has improved, with the debt-to-GDP ratio standing at 34 per cent by the end of 2024, down from 36.5 per cent in 2023. The Ministry of Finance also reported a reduction in public debt to RO14.4billion in 2024, a 5.3 per cent decline from RO15.2 billion at the start of the year.
Bonds and sukuks
As part of its borrowing strategy, Oman plans to raise RO750 million from the domestic market in 2025 through eight issues of government development bonds worth RO550 million and two issuances of sovereign local sukuk totaling RO200mn.
The bond issuances are scheduled for February (RO100mn), April (RO100mn), June (RO60mn), July (RO60mn), August (RO60mn), September (RO60mn), October (RO60mn), and December (RO50mn). The sukuk offerings are planned for May (RO100mn) and November (RO100mn).
Balanced financing approach
The borrowing plan is designed to meet Oman’s financing needs at a reasonable cost while managing risk within acceptable levels. The Ministry of Finance emphasised its goal of improving the efficiency of the local debt market by expanding the market for government securities.
It also seeks to optimize financing costs, diversify funding sources, and broaden the investor base to reduce reliance on external debt.
In 2024, Oman had planned to raise RO600 million through local borrowing and RO1.285 billion via external debt. For 2025, the government has increased the share of local borrowing, reflecting its strategy to strengthen the domestic debt market.
Positive fiscal trends
Oman has made significant strides in managing its fiscal position. Preliminary results for 2024 indicate a 10.4 per cent reduction in public debt servicing costs, which fell to RO940 million from the originally estimated RO1.05 billion.
These improvements highlight the government’s commitment to prudent financial management and its ability to leverage favorable market conditions to reduce costs and debt levels.
While the borrowing plan for 2025 provides a clear roadmap, the Ministry of Finance noted that adjustments may be made depending on actual financing needs and market conditions, ensuring flexibility and responsiveness to evolving economic dynamics.
